46. During thE yEar, thErE has bEEn an EmbEzzlEmEnt of funds at Romai TEa EstatE by onE of thE staff mEmbErs of thE TEa EstatE, who has bEEn suspEndEd from thE EmployEmEnt of thE Company. ThE sum so EmbEzzlEd by adopting unscrupulous mEthodlogy has bEEn quantified as ' 25.72 lakhs by thE invEstigating financE tEam of thE Company. This amount has bEEn chargEd off as ExpEnsE for the year (Note 39 - Other Expenses) pending conclusion of the criminal and civil proceedings initiated against the concerned person.
47. EMPLOYEE BENEFIT OBLIGATION Defined Contribution Plans
The Company operates defined contribution scheme for payment of pension for certain eligible employees. Under the scheme, contributions are made by the Company, based on current salaries, to the recognized Superannuation Fund maintained by the Company. The Company is also contributing to the Governments administered Provident Funds in respect of all the qualifying employees.
An amount of ' 1,251.57 lakhs (2025 - ' 972.21 Lakhs) has been charged to the Statement of Profit and Loss on account of defined contribution schemes.
Defined Benefit Plans
The Company also operates defined benefit scheme in respect of gratuity benefit towards its employees. This schemes offer specified benefits to the employees on retirement, death, disability or cessation of employment. The liability arising for the Defined Benefit Scheme is determined in accordance with the advice of independent, professionally qualified actuary, using the Projected Unit Credit (PUC) actuarial method as at year end. The Company makes regular contribution for this Employee Benefit Plan to a recognized Gratuity Fund. This Fund is administered through approved Trust, which operate in accordance with the Trust Deed and Rules.
Method used for sensitivity analysis:
The sensitivity results above determine their individual impact on the Plan's end of year Defined Benefit Obligation. In reality, the Plan is subject to multiple external experience items which may move the Defined Benefit Obligation in similar or opposite directions, while the Plan's sensitivity to such changes can vary over time.
D. Risk Management
The abovE bEnefit plans expose thE company to actuarial risks such as follows:
(i) Interest rate risk: The defined benefit obligation calculated uses a discount rate based on government bonds. If bond yields fall, the defined benefit obligation will tend to increase.
(ii) Salary inflation risk: Higher than expected increases in salary will increase the defined benefit obligation_
(iii) Demographic risk: This is the risk of variability of results due to unsystematic nature of decrements that include mortality, withdrawal, disability and retirement. The effect of these decrements on the defined benefit obligation is not straight forward and depends upon the combination of salary increase, discount rate and vesting criteria. It is important not to overstate withdrawals because in the financial analysis the retirement benefit of a short career employee typically costs less per year as compared to a long service employee.
48. Financial risk management objectives
The Company's businEss activitiES expose it to CErtain financial risks - markEt risk, liquidity risk and credit risk. In ordEr to minimizE thosE risks, the Company has risk management policies and procedures in place as approved by the Risk management Committee of the Board of Directors of the Company after due evaluation of key risks facing the business of the Company:
a) Market Risk
The Company's business of Cultivation, Manufacture and Sale of Tea is primarily agricultural in nature. Moreover, the sale price of Tea is largely determined by the market forces of demand and supply. Thus, adverse weather conditions and uncertain tea market expose it to the risk that the fair value or future cash flows may adversely fluctuate. The Company closely monitors the changes in market conditions and select the sales strategies to mitigate its exposure to various market risks. Other Market risks are as under:
i. Foreign Currency Risk
The Company undertakes significant transactions denominated in foreign currency with its customers in relation to Exports of Tea. This results in wide exposure to exchange rate fluctuations. Such exchange rate risk primarily arises from transactions made in foreign exchange and reinstatement risks arising from recognized assets and liabilities, which are not in the Company's functional currency (Indian Rupees). A significant portion of these transactions are in US Dollar, Euro and British Pound Sterling etc.
The Company, as Risk Management Policy, hedges its exposure in foreign exchange whenever considered appropriate based on their perception about such market and reviews periodically its exposure therein to ensure that results from fluctuating currency exchange rate are appropriately managed. The Company also avails Packing Credit Loan in Foreign Currency thereby exchange rate get crystalized with neutral effect.
The impact of sensitivity analysis (10% appreciation / depreciation of the foreign currency with respect to functional currency) arising on account of above outstanding foreign currency denominated assets and liabilities would be ' 0.33 Lakhs (31st March, 2025 - ' 1.58 Lakhs).
ii. Interest Rate Risk
Interest rate risk refers to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The objectives of the Company's interest rate risk management processes are to lessen the impact of adverse interest rate movements on its earnings and cash flows and to minimize counter party risks.
The Company is exposed to interest rate volatilities primarily with respect to its borrowings from banks. Such volatilities primarily arise due to changes in the Lending rates of Banks, which in turn are linked with Repo Rates as announced by RBI from time to time as well as other economic parameters of the Country. The Company manages such risk by operating with Banks having strong fundaments with comparatively lower Lending Rates in the Market.
Interest rate sensitivity
Impact of possible volatility in the interest rate in case of short-term borrowings is minimal. However, change in interest rate by 100 basis points would lead to an impact of ' 46.27 lakhs on term loan interest for the current year (' 11.22 lakhs for previous year).
b) Liquidity Risk
Liquidity risk is thE risk that thE Company may EncountEr difficulty, including SEasonality, in mEEting its obligations duE to shortagE of liquid assEts.
ThE Company mitigates its liquidity risks by Ensuring timely collEctions of its tradE rEceivablES, cIose monitoring of its crEdit cycle, Ensuring optimal movements of its inventories and avoid blockage of working capital in non-productive current assets.
c) Credit Risk
Credit risk is the risk that counter party will not meet its obligations leading to a financial loss to the Company.
The Company has its policy to limit its exposure to credit risk arising from outstanding receivables. Management regularly assesses the credit quality of its customer's based on which, the terms of payment are decided. Credit limits are set for each customer, which are reviewed at periodic intervals. The credit risk of the Company is low as the Company sells a significant volume of its Teas through the auction system, which is on cash and carry basis. The exports are made mostly to worldwide reputed Corporates like Taylors of Harrogate, Ahmad Tea FZ - LLC, Ahmed Mohamed Saleh Baeshen & Co., Thompson Lloyd & Ewart Ltd. etc., and otherwise backed by letter of credit or on advance basis. Further, the receivable from overseas buyer is covered by ECGC Policy.
Fair value hierarchy
Fair valuE of thE financial instrumEnts is classifiEd in various fair valuE hierarchies basEd on thE following threE IeveIs:
Level 1: Quoted prices [unadjusted] in active market for identical assets or liabilities.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data and rely as little as possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
Level 3: Inputs for the assets or liabilities that are not based on observable market data [unobservable inputs).
The management consider that the carrying amounts of financial assets [other than those measured at fair values) and liabilities recognized in the financial statements approximate their fair value as on the reporting date.
There were no transfers between Level 1, Level 2 and Level 3 during the year.
51. Quarterly returns or statEmEnts of current assEts filEd by thE company with banks arE in agreEmEnt with thE books of accounts.
52. Relationship with struck off companies: The Company does not have any transactions or relationships with any companies struck off under section 248 of the Companies Act, 2013 or section 560 of the Companies Act, 1956.
53. There are no transactions that has been surrendered or disclosed as income during the year in the tax assessments under the Income Tax Act, 1961 which have not been recorded in the books of account.
54. There are no charges or satisfaction of charges yet to be registered with Registrar of Companies beyond the statutory period.
55. The Company has not traded or invested in Crypto currency or Virtual Currency during the financial year.
56.1. The company has not advanced or loaned or invested funds (either from borrowed funds or share premium or any other source or kind of funds) to or in any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary shall: (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
56.2. The company has not received any fund from any person(s) or entity(ies), including foreign entities ('Funding Parties') with the understanding (whether recorded in writing or otherwise) that the Company shall: (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the company (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.
57. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.
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